Stocks Slip Amid Declines in Financial Sector
January 17 2017 - 4:03PM
Dow Jones News
By Akane Otani and Riva Gold
The Dow Jones Industrial Average fell 100 points Tuesday as bank
shares tumbled.
Other postelection trades also reversed, with government bonds
strengthening and the dollar sliding to a one-month low. After
Election Day, investors betting on higher growth and inflation
under President-elect Donald Trump sent the dollar and shares of
financial and industrial companies higher while selling long-dated
government debt and gold. Yet in recent weeks, many of the most
popular trades have stalled.
The S&P 500 financials sector slid 2.3%, on track for its
worst day in months. Morgan Stanley, which posted its best
fourth-quarter results since the financial crisis, fell 4.4%.
Goldman Sachs Group Inc. and J.P. Morgan Chase & Co. lost more
than 3% apiece, weighing on the Dow industrials.
The WSJ Dollar Index, which tracks the currency against a basket
of 16 others, tumbled more than 1% to a one-month low after Mr.
Trump described the currency as "too strong" in an earlier
interview with The Wall Street Journal.
Government bonds climbed, with the yield on the 10-year U.S.
Treasury note falling to 2.327%, according to Tradeweb, from 2.380%
on Friday. Earlier, the yield had fallen to 2.307% -- its lowest
intraday level since Nov. 29. Yields fall as bond prices rise.
Some investors and analysts attributed the day's action to
nervousness just days ahead of the presidential inauguration,
following steep moves after the November election.
"We had this period of time where we rallied on potential
policies, but now the market is looking for what actually comes
in," said Brent Schutte, chief investment strategist at
Northwestern Mutual Wealth Management Company.
The Dow Jones Industrial Average was recently down 100 points,
or 0.5%, at 19786. The S&P 500 declined 0.5% and the Nasdaq
Composite lost 0.8%.
Haven assets gained. Gold for January delivery gained 1.4% to
$1,212.00 an ounce, its highest settlement since Nov. 17. Shares of
dividend-paying stocks, which also tend to benefit when investors
are seeking safety, rose in the S&P 500, with the utilities
sector up 0.9% and the real-estate sector up 0.5%.
In Europe, stocks pared earlier declines and the British pound
charged back from a 31-year low after Prime Minister Theresa May
gave more details about her plans to take the U.K. out of the
European Union.
The Stoxx Europe 600 fell 0.2%, and the British pound rose 2.9%
against the dollar to $1.2395.
While Mrs. May said in her speech that the U.K. intends to leave
the European Union's single market, "the most negative aspects of
her speech were already out there, and everything else was pretty
levelheaded in tone," said Stephen Gallo, strategist at BMO Capital
Markets.
Earlier, a stronger yen weighed on stocks in Japan, sending the
Nikkei Stock Average down 1.5% in its biggest drop this year. The
Shanghai Composite recovered from early losses to rise 0.2%, ending
a five-day losing streak, while the Hang Seng Index added 0.5%.
Write to Akane Otani at akane.otani@wsj.com and Riva Gold at
riva.gold@wsj.com
(END) Dow Jones Newswires
January 17, 2017 15:48 ET (20:48 GMT)
Copyright (c) 2017 Dow Jones & Company, Inc.